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Lord Newby: Over the next few weeks, we will meet to decide exactly how we intervene in debates and, indeed, exactly where we sit. For today, we agree that it was necessary for the Government, in the light of the European economic circumstances, to take quick action to demonstrate their resolve on the budget deficit. On a specific point, I urge the Minister to abolish quickly those regional development agencies that are to be

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abolished, and to confirm quickly the status of those that are to remain so that they can continue with their valuable work.

Lord De Mauley: My Lords, I thank my noble friend for his question. I am delighted that he said that he will be rigorous in his questioning. I thank him for his response on this point, and I will take back his point about RDAs to the department.

Lord Soley: My Lords, I am sure that the Minister will take that back to the department. I am also sure that at some stage he will come back to the noble Lord and tell him what he has to think. However, my main question right now goes back to the beginning of his Statement when he did again what he did in opposition: rubbish the British economy. While that was depressing in opposition, it is positively dangerous when you do that in government. There is a real danger of a double-dip recession. This is more like the 1930s, because of its international style, than the Conservative slumps of the 1980s and early 1990s. Will the Minister not confirm that if you talk down the British economy, people will believe you and you will help to trigger the second recession which just about everyone in industry and commerce generally is desperately trying to avoid?

Lord De Mauley: My Lords, I am most grateful to the noble Lord, Lord Soley, for his question. I absolutely reject the assertion that the Government are talking down the British economy. I reiterate that the Governor of the Bank of England himself has said that he does not think that £6 billion of cuts will dramatically change the outlook for growth this year. He has also said that, given the bigger risk at present and the experiences of the past two weeks, it is absolutely crucial to put into place clear and credible measures to deal with the deficit.

Lord King of Bridgwater: My Lords, does my noble friend not think that, as we as an incoming Government now face the biggest mess that this country has had to face for years, it might have been more appropriate for the noble Lord speaking on behalf of the Opposition to express contrition for the mess that they have left behind and which the Government now have to tackle? Given the situation in Europe now-a very grave situation brought on in part by the fact that some Governments have failed to face up to their responsibilities and are not taking action early enough-it would have been criminal of this Government not to have taken early action to face this situation. It is incredible in this situation to see that the Opposition still appear to support the policy of no action yet. Would that not be the most disastrous approach for this Government to take?

Lord De Mauley: My Lords, I am most grateful to my noble friend Lord King for his supportive comments. Europe is indeed in a very grave situation, and it would be very dangerous if this Government did not take early action to make these cuts.

Lord Kinnock: May I confirm to the Minister that we on this side of the House do not favour inaction but oppose wrong action very strongly and will continue

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to do so through the coming months of examination? Will he answer my noble friend Lord Eatwell's specific questions on outcomes, as the Government have been silent on this, despite opportunities? Will he for instance tell us the cost to the public purse of breaking or suspending contracts to the private sector? We have heard nothing on that.

Neither have we heard about the consequences for employment and small businesses of the action taken to make cuts this year of £6.25 billion. These issues are vital for a reason which I am sure the Minister will recognise; we are about to get 15 times £6 billion of cuts at the very least over the next few years. If the course that is now set is continued, I put it to him that we will get not a coalition for fairness but a corrosion of jobs, opportunity and growth.

Lord De Mauley: My Lords, the noble Lord, Lord Kinnock, is very experienced in these matters. I agree with him on opposing wrong action, and we on these Benches look forward to the debates that he promises over the next few months. The Government wholeheartedly agree with him about the effect on employment and small businesses, but we differ in that we believe that high interest rates are what will really adversely affect small businesses and employment and that it is absolutely crucial to make the cuts about which we are talking. He asks a very specific question about the cost of breaking contracts. I am not in a position to answer that now, and I will do my best to respond to him in writing.

The Earl of Listowel: My Lords, the Minister referred to the removal of ring-fencing of certain funding to local authorities. Is he aware of the concern that sometimes local authorities will emphasise services such as waste removal and roads above services to vulnerable children and families because they are the most apparent to their voters? Will he monitor the effects of that change and ensure that it is not unfairly disproportionate on the most vulnerable? Will the removal of ring-fences directly affect services to vulnerable families?

Lord De Mauley: My Lords, I am grateful to the noble Earl, Lord Listowel, for his point. As I have said, the Government believe that giving freedom to local authorities will enable them to meet the real priorities in their local areas. I assure him that these matters will be monitored closely and that the most disadvantaged in society absolutely must be protected.

The Earl of Onslow: My Lords, is it not astonishing that, on listening to the questions from the opposition Benches, you would have thought that we were running a surplus? We are running an enormous deficit. Will my noble friend please encourage his colleagues to continue in attacking the most appalling economic heritage since Denis Healey, Mr Callaghan, Philip Snowden, Hugh Dalton or anyone else you care to mention in Labour Governments in the past who have left us in a similar mess to that which we are in now?

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Lord De Mauley: My Lords, I am most grateful to my noble friend Lord Onslow for his helpful words. I assure him that I will indeed exhort my colleagues as he requests.

Lord Anderson of Swansea: My Lords, any such cuts are likely to bear disproportionately on those who depend on public expenditure, notably the poorest people in the poorest regions of this country. What formula is being used? How does the noble Lord seek to protect vulnerable people and areas such as Wales which depend disproportionately on public expenditure?

Lord De Mauley: My Lords, I have just said that the Government agree that we must pay closest attention to the effect on the most disadvantaged in society. The noble Lord, Lord Anderson, specifically asked about the devolved Administrations. At this stage, all that I can say is that we acknowledge that these cuts must be fair. While savings are to be made as a top priority, they must be done sensitively.

Lord Burnett: My Lords, will my noble friend encourage the Government to produce soon an accurate figure of the total accrued national debt, including the off-balance-sheet debt, such as the total PFI liabilities and the massive sums owing for unfunded public sector pensions? I am sure that that figure would help us in debates such as this.

Lord De Mauley: My Lords, I am most grateful to my noble friend Lord Burnett for that point. As he is aware, there will be a Budget shortly, which will tackle the task he has suggested. There will also be established an Office for Budget Responsibility. Its job will be to root out and identify the items to which he specifically referred.

Baroness Farrington of Ribbleton: My Lords, given that many Conservative-controlled authorities have a zero-rate increase this year and cuts already, will the Minister explain in greater detail which of the services not ring-fenced do not assist the most vulnerable people? Which services specifically do his Government consider to be un-ring-fenced and therefore expendable?

Lord De Mauley: My Lords, I thank the noble Baroness, Lady Farrington, for her kind question. It will be a principle of this Government that such matters will be for local government to decide.

Lord Blackwell: My Lords, will my noble friend be robust in rebutting the assumption from the opposition Benches that reductions in expenditure necessarily lead to reductions in outcomes? Does he accept that most businesses in this country that have to control their costs every year are well aware that removing waste and inefficiency is normally a way of delivering better services, by re-engineering the processes? Does he accept that, after a period of unparalleled growth in government expenditure, there is a huge target to go for in improving efficiency while improving services in this country?

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Lord De Mauley: My Lords, I entirely agree. The control of costs is vital; likewise the removal of waste, which does not necessarily lead to cuts in productivity.

Lord Brooke of Alverthorpe: My Lords, I welcome the new Minister to his role and wish him well in the future. One of the issues that the coalition Government will face will be unemployment. Will he again consider giving a better answer to the Front-Bench questions about the consequences of this action and the number of jobs that will be lost? I advise him that if he cannot do so today and unless we get the full facts, this side will not let go of the issue of the options on jobs that will disappear when cuts come. The Government should take note that they will be required to tell us what the consequences of each of their cuts will be in future.

Lord De Mauley: My Lords, I share with the noble Lord a grave concern about unemployment. I point out to him that, at the end of 13 years of Labour government, unemployment was higher than it was at the beginning. We will do our level best to tackle unemployment and keep it under control.

Lord Bates: My Lords, will my noble friend confirm that the current national debt amounts to some £893 billion run up by the party opposite when they were in government, and that the responsible cuts that he is proposing today therefore amount to less than 1 per cent of the total? Would he care to speculate about the consequences for small businesses, for unemployment and for the most vulnerable if firm action were not to be taken to tackle the debt mountain that has been left for us?

Lord De Mauley: My Lords, my noble friend Lord Bates is quite correct. I have said that the Government believe that the effect of not making cuts, feeding through into higher interest rates, would be vastly worse for small businesses and for unemployment than the effect of making those cuts.

Lord Sewel: My Lords, will the Minister finally give an answer to the question on the assessment of the effect on unemployment of the cuts that the Treasury has made? Will he simply give those numbers?

Lord De Mauley: My Lords, I can only refer the noble Lord back to my earlier answer that the effect would be worse if we did not make these cuts than if we do.

Lord Hamilton of Epsom: My Lords, I shall follow up on my noble friend Lord Blackwell's point. Does the Minister accept that one of the problems that the economy is facing is falling productivity, and that this is caused by the wall of money that has been thrown at the public sector? There would be enormous opportunities to make savings if actual productivity were raised in the public sector, and that would not affect front-line services.

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Lord De Mauley: My Lords, I agree with my noble friend. I am convinced that there are substantial increases in productivity to be made, despite making these cuts.

Lord Davies of Oldham: My Lords, the Minister has not been his usual frank self in responding to the question about front-line services, which are crucial to this debate. Nor has he been frank when he maintains that introducing cuts at this stage may not do irretrievable damage to the economy with a double-dip recession. After all, his party argued that in the general election and did not achieve a majority, while two other parties-the Liberal Democrat party included-argued the danger to the economy of cuts at this point. Why, therefore, is he persisting with this position?

Lord De Mauley: My Lords, the Government believe that the line they are taking is the right one to achieve the best results for the country.

Lord Cotter: On the issue of increasing apprenticeships, which is very welcome, will the Government continue to look at ensuring that small businesses are able to engage in apprenticeships and are given assistance in that direction?

Lord De Mauley: My Lords, I thank my noble friend Lord Cotter for his question and for his kind comments on the Government's actions proposed in the area of apprenticeships. I can assure him that we will keep a very close eye on its effects on small businesses.

Queen's Speech

Debate (2nd Day)

3.50 pm

Moved on Tuesday 25 May by Earl Ferrers

"Most Gracious Sovereign-We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament.

The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford): My Lords, it is a privilege to open the days of debate ahead on the humble Address. I want to begin with some of my own tributes. My first tribute, echoing that of the Leader of the House yesterday, is to the outgoing Leader of the House, now the acting Leader of Her Majesty's Opposition, the noble Baroness, Lady Royall of Blaisdon. I am thinking of my time on the Front Bench opposite, when she led your Lordships' House through some intensely difficult moments with the greatest skill. We all owe her our thanks. We also extend our deep sympathies to her for her tragic loss.

I also salute the work of my predecessors in the role I am now fulfilling over the past years-it is been about nine years now-including the noble Baroness, Lady Kinnock, who I am happy to see in her place and

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who was doing my job before; the noble Lord, Lord Malloch-Brown; and, particularly, the noble Baroness, Lady Symons of Vernham Dean. They all set very high standards which I shall be hard pressed to follow, but I will do my best.

For the sake of my own career prospects-which, I admit, are extremely limited-I should also pay tribute to the two ex-leaders of the opposition parties, now the Leader and the Deputy Leader of the House, who have come together with such grace and speed, sacrificing the joys of opposition for the chill exposure of government. I acutely realise that from now on I shall have to pick my words with exceptional care, otherwise I may attract some distinctly uncoalition-like rebukes from my noble friend Lord McNally about my general abilities, qualifications and grasp of events, if not more.

I am pleased to be dealing with foreign affairs alongside my new noble friend Lord Wallace of Saltaire. To claim that we have always seen eye to eye on such matters as the future development of the EU and the Lisbon treaty would be stretching credulity beyond limits, but he is a towering authority on international issues and it is a privilege for me to be working with him. Finally, I am glad that my long-standing colleague, my noble friend Lord Astor, has been appointed Parliamentary Under-Secretary of State at the Ministry of Defence and will, of course, be winding up at the end of today's proceedings.

We are witnessing a huge change in the way states and Governments face and interact with each other, and it is desirable now that Britain should be at its most agile, innovative, ingenious and constructive at operating within this quite new international milieu. First, while the Cold War is obviously decades behind us, with its grim threat of mutual nuclear annihilation, which some of us grew up with, the post-Cold War phase has brought new dangers of nuclear proliferation. That is why my right honourable friend the Secretary of State, Mr Hague, announced this morning, after only a few days in office, a highly significant departure in the UK's strategic weapons policy-namely, by publishing for the first time the full number of nuclear warheads in the UK stockpile. In future, our stockpile will not exceed 225 warheads.

The Government will also launch a review of the UK's nuclear posture; that is, its so-called "declaratory policy". None of this will affect our national security, but it should all help considerably to boost the climate of trust between nuclear and non-nuclear weapon states which has been so signally lacking. All of this further affirms the full commitment of the coalition Government to the current Nuclear Non-Proliferation Treaty review going on in New York while we speak, where we are playing a strong role and which my honourable friend the Parliamentary Under-Secretary of State is attending.

A second major factor that we must now recognise is that the axis of international power and influence is shifting, not merely to the so-called "emerging powers" such as the BRICs-that is, Brazil, Russia, India and China-about which I shall say more in a moment, but also to increasingly significant players such as Turkey, Egypt and Saudi Arabia and to groupings

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such as the Shanghai Co-operation Organisation. The growing significance of the G20, alongside the G8, also clearly reflects this trend.

Thirdly, when it comes to our military strength-our hard-power capability-the shield of Achilles has today to be raised not only against visible enemies but also against the cowardly viciousness of the roadside bomb and other murderous methods. At the same time, the work of the military is increasingly and inevitably intertwined with reconstruction and civil repair. The Taliban and its Pashtun backers are one vivid and present example of these challenges. The wind-up speech of my noble friend Lord Astor will focus on the many specific questions and issues related to the Afghanistan war which I know are on your Lordships' minds and on which we intend to give regular and comprehensive reports to Parliament on a quarterly basis.

Successful power deployment today-that is, power to protect and promote our people, national commercial interest and prosperity and yet at the same time uphold our values and maximise our contribution to global peace in a heavily interdependent age-therefore rests overwhelmingly on diplomacy in all its forms. That means operating not just through government-to-government relations but also, increasingly, through every kind of sub-governmental, non-governmental, professional, informational and commercial linkage. It demands a continuous spread of cultural diplomacy and soft-power deployment throughout the globe and the international institutional network. This dense mass of connections is the new global network in which we have to operate. What people call our enlightened self-interest in this new context is no narrow affair. It involves being an effective force for good in the world, fighting poverty, meeting or adjusting environmental and climatic threats as well as seeking the very best for our own nation and society. At government level, it requires an intricate web of diplomatic relations with nations large and small, conducted with the maximum mutual respect and underpinned by a highly active, informal latticework of connections.

Of course, we want a strong, close and frank relationship with the United States of America-to use the words of my right honourable friend the Secretary of State-and, within our own region, with our fellow European Union states. We want to use and strengthen the combined weight of the EU wherever we can. However, in the international landscape, the channels for power and influence will lie also in our bilateral network links with a whole variety of new players and not only with and through the main transatlantic duo.

Lord Clinton-Davis: How does the noble Lord reconcile that with his party's alliance with extreme right-wing forces in the European Union? Are his views shared by the Liberal Democrats in that respect?

Lord Howell of Guildford: This is a coalition Government and a lot of views are shared. I shall come to European Union matters in a moment. Not every detail is shared, but the majority are. I assure the noble Lord, who has considerable experience of these

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things, that what I shall say represents the united view of the coalition on how we go forward on the crucial question of the European Union.

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